Posted by:

The budget and foreign aid

It always takes a couple of weeks for the dust to settle on the ‘big ticket’ items in any federal budget before space can be found to discuss some of the smaller budget areas. The global financial crisis (GFC), certainly added a extra level of complexity to the budget process (and perhaps an extra level of naivety to the subsequent analysis). But now that that some time has passed and the hysteria over the budget deficit has slowed somewhat, discussion of Australia’s aid program can take place.

Australia’s aid program is rarely cited as a ‘water-cooler’ issue, and never appears on lists of reasons that affect people’s voting intentions, yet, for the millions of people within our part of the world, the Australian aid program is an important issue. Properly spent, aid can (and does) reduce maternal deaths, increase literacy, raises household income, improves the life chances of girls and enhances economic activity that benefits the poor. Prior to the last election, both major parties pledged to increase Australia’s aid. This of course was not a difficult pledge, because the aid budget has been run down during the previous decade.
In the Rudd government’s first budget in 2008, this pledge was met and the aspiration to increase Australia’s aid to 0.5 percent of GNI was reconfirmed. (It is important to note that the global target for aid is 0.7 percent of GNI). But with the looming loss of government revenue caused by the GFC and the pressure to minimise the budget deficit, there was some fear that the aid budget would be seen a ‘low-hanging’ fruit ripe for cutting.
Thankfully this did not occur and the aid budget was increased in both real and relative terms. In the coming 12 months, the Australian aid budget will be 0.34 percent of GDP – up from 0.33 (with the target of 0.5 percent by 2015-16 reconfirmed) or in dollar amounts, rise from $3,789.6 in 2008/9 to $3,865.1 in 2009/10. So despite a shrinking economy, the aid budget actually increased. 
It is interesting to note that the Australian government has recognized the importance of food security. Before we had the current GFC, we had another GFC in early 2008 – the global food crisis in which prices of some staples doubled almost in just months. Food riots ensued and many millions of people were pushed back below the poverty line. The geographical focus of the aid budget remains Papua New Guinea and the Pacific. Given our historical links and proximity, this makes sense.
The Government has supported the aid program during these fiscally fraught times, it should be congratulated on this. It is now up to those in the development sector to work closely with the Government to ensure it is spent properly so that it does enhance the dignity of the poor.

Leave a Reply